COWBOY CAPITALISTS - PART 1
For maverick entrepreneur Ian Cox, Africa is the last frontier of free enterprise. The former small-time hustler has been busting his ass on the continent for years, selling and moving merchandise. In 2011 he nabbed a lucrative United Nations contract to transport equipment from South Africa to South Sudan, a country on many countries’ embargo list. The other problem: the journey north entails passing through countless checkpoints and dealing with bribe-happy officials and their nonsensical paperwork and regulations.
How Did Zimbabwe End Up with Just $217 in the Bank?
Last week, the Zimbabwean government announced that after paying public workers’ salaries, its bank balance is sitting at a pitiful $217. TWO HUNDRED AND SEVENTEEN DOLLARS. I once found $200 on the floor of a gas station. If I’d known that made me richer than a country, I wouldn’t have been so bummed out about having to spend it all on tax debts.
The information came from Finance Minister Tendai Biti who—as far as politicians in Zimbabwe go—is about as honest as it gets. Biti is the Secretary General of the MDC party—the good guys who’ve spent their entire existence being hurled off the edges of cliffs and dangled from helicopters by Robert Mugabe’s ZANU-PF. Back in 2008, their party leader, Morgan Tsvangirai, made a deal with the devil and agreed to share power with Mugabe. As Zimbabwe’s new Finance Minister, poor Biti was dropped right in the steaming pile of shit that continues to double as the country’s bank vault.
Is This the Century of Africa’s Rise?
For decades, the dominant African narrative in the media was of famine, war, and disease. Recently, in light of a perceived economic upturn and a relative reduction in famine and disease across most of the continent, the narrative has changed to one of thrusting progress. The Economist and TIME magazine have both published big articles in the last two years called “Africa Rising,” complete with positive economic statistics and photos of children flying rainbow kites in the shape of the African continent.
We have moved from pictures of starving children with flies crawling across their faces to pictures of young men in big cities talking on mobile phones. Of course, neither narrative is correct. No narrative that attempts to take on something so large and diffuse can ever be correct. But there is something about these conveniently totalizing stories that fires the passions of believers and cynics alike. Believers point to fast-growing economies and fragile but intact democracies, non-believers refer to what the Kenyan writer and investigative journalist Parselelo Kantai told me was an “insidious little fiction manufactured by global corporate finance.”
The idea of Africa’s rise comes from a straightforward interpretation of high growth rates and increased foreign investment in parts of the continent. As The Economist’s piece pointed out, “over the past decade, six of the world’s ten fastest-growing countries were African.” According to McKinsey & Company, real GDP in Africa grew twice as fast in the 00s as it did in the 80s and 90s. Suddenly everyone has a mobile phone and that mobile phone has great reception.
Renaissance Capital’s Charles Robertson, author of The Fastest Billion, drew my attention to annual growth rates of “around six percent across sub-Sahara since 2000. Some say rapid growth is inevitable from a low base. This is nonsense. People got poorer in sub-Saharan Africa from 1980 to 2000.” Recent growth in Africa and rapid increases in Asia-Africa trade and investment have taken place against a backdrop of global austerity. As people struggle desperately in southern Europe, gas and oil resources are enriching a new generation in Tanzania, Kenya, Ethiopia and even—if proposed exploration occurs this year—Somalia and Somaliland.
The problem, though, is that most of this wealth is extractive. There is, as Patrick Smith, editor of Africa Confidential, told me, a “lack of value added on the African side.” “The energy companies are seeing massive domestic demand from Asia and they are capitalizing on that,” he said.
Parselelo Kantai put it more bluntly: “What is happening on the continent economically is a new era of massive resource extraction, catalyzed mostly by Chinese domestic demands. And because it is almost exclusively extraction without on-site value addition, it’s a process where the continent’s elites, the Chinese and Westerners, are the only people who benefit. I don’t see why it shouldn’t be called by its real name: the Second Scramble for Africa.”
What both Smith and Kantai are referring to is a system in which an elite minority, often not from Africa, benefit extraordinarily from the natural resources the continent has and the world needs. The outsiders may not wear pith helmets and long for a proper cup of tea any more, but it’s colonial business as usual.